Girlfriend has a 40 year 'savings plan' with Hearts of Oak, which has just past 10 years at which she can cash in, but the payout is approx 2/3 of what she paid in. Should she carry on paying and hope for some growth or take her losses an run?
Cheers
Doesn't sound much like a simple savings plan, which would surely give her all her money back, plus a few % interest. Ah I've just seen the reference to 'Endowment' in the subject, which is slightly confusing since I'd normally associate this with a an endowment mortgage tied in with some sort of life assurance plan.
Is this some sort of plan tied in with the stock market? In which case, and assuming it's been a regular savings plan, it no doubt reflects exactly what's happened to the market in that period. I'm chairman of an Investment club of about that age, and we're currently worth about 87% of our total savings - and we've not had to pay management charges, which your girlfriend presumably has.
Only she can answer the question, and it obviously depends on what she'd do with the 67% she took out. If it went back into another stock market investment plan, then arguably she'd fair worse since presumably the early years management charges are now out of the way with the Hearts of Oak plan.
All other things being equal, and if 'twere me, I'd hang on longer and see what happens. Or at least get HoO to clarify whether all the charges have already been front loaded.
Usual caveat. I'm not a Financial Adviser.
Rgds
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*********************************************************** *** VOTE UK Independence Party on June 10th *** *********************************************************** Richard Buttrey, Cheshire, UKRichard Buttrey blarted:
Hi, thanks for you answer. Yes its got a life insurance element, albeit a tiny one, its one of those 'tax efficient friendly society' policies - not quite sure what the funds were/are going into - but it was front-loaded commission/costs and full of talk of '40% of units in first year, rising to 100% in 10th year' or some such figures.
Bitstring , from the wonderful person George Edwards said
In that case I'd stick with it. Most of these friendly society plans manage to survive based on the people who bail out early, having paid all the commission. When is her =next= chance to get out with no penalty or MVA or whatever?
GSV Three Minds in a Can blarted:
Mm, bit vague on that one without writing to the company, she doesn't have the original brochure and whats more worrying neither do they! But I think she can cash it in anytime after the ten years, so i can't see where the 40 yr bit comes in - unless that is just when the insurance element cuts out - she would be 73 then.
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